romans holiday

Cup and handle anyone?

Good long term graph here. I am only playing the gold/silver ratio on the back of investor perceptions of inflation. Silver could well go up along with stocks and other commodities on the inflation trade, but I expect this trade to quickly reverse at some point this summer. Jack be nimble....

I consider the swapping of silver to gold the booking of profits. Silver is speculative, gold is safe[r]. If you think another round of deleveraging is possible/probable, you would want to swap most of your silver for gold beforehand. I think we could see this sometime this summer when the dollar/bonds get into trouble. Bernanke and company could crash the markets to salvage the dollar.

I am hoping to start swapping when we get to around 50:1. ... do not want to wait too long as you never now when the markets may next take fright which would see silver sell off more compared to gold. We have had a deflation scare, we are now in an inflation scare, who knows, we could see another deflation scare and then back again. Investors are split and confused and with that I reckon the silver/gold ratio could become a lot more volatile in the near future. Silver is more speculative than gold. It will do well on the inflation trade leading to a low ratio. When/if the markets sell off, a high ratio will be restored. Personally, I like the idea of trading the ratio as there is always the possibility of being wrong in the investment area [though I believe I am most probably right ] By trading the ratio, you can accumulate bullion while freeing up further capital/income [as a hedge] for investments or saving in another currency/s. For myself, I want to remain completely liquid and in a variety of currencies. For those that have completely lost faith in other currencies, they can use the ratio to accumulate while not having to be too concerned about nominal prices [i suspect though that even the most fervent gold bug is concerned about the price due to finite funds and the wish to accumulate as much as possible ]. I am selling most at 50 for gold [will keep some silver and buy some dollars also] and then buying back again at around 80. I think the particular ratio would come down to people's individual appetite for risk/speculation and I would imagine most would start "averaging" out at some point.

Good call DrB. I also had C$ and bought silver with them a little earlier than that top. While the US$ was tanking, the C$ was mostly tracking silver so I just decided to put into silver. The market looks increasingly confused and over the course of the year I wouldn't be surprised to see it continue up, then whiplash to the downside and then up again. I am thinking silver is one way to play this; ride the market up as the hot money goes into commodities then sell silver for gold and US dollars. One for the booking of profits and the other for continued speculation.

I've never bought into the moon thing though it does make for good hyperbole..... and who knows might even happen. I have just bought gold and silver as superior currencies while other currencies buckle under deflation and debt. Keeping my eyes on the bond market.

Yep, could be a good buying op coming up. Keeping my eyes on silver.

Job numbers just came through, lower than expected. "ONLY" 345,000.... fewest since the month of September. Gold down also on the feel good factor.

Good point. Sinclair is leading a crusade of sorts. But as investors, every man should be his own general and have a strategy. He can not afford to be a mere foot soldier.

Buy some dollars with your pounds.

Goldrums or drum rolls? Bit cheesy I know.

I have made an attempt to answer this here. I also do not see Weimar but see certain currencies devalued by half possibly this year or the following. http://www.greenenergyinvestors.com/index....st&p=110858 Couldn't resist that one.

There is an excellent opportunity today to acquire wealth and avoid debt [free-hold property] by riding this gold bull market up. These opportunities do not come along often. The logic is simple; swap your weakening currencies for strengthening gold. Wait and then buy property when prices have deflated.

The thing is, many buying gold are not so much concerned with the price as what it is priced in. The ground for currencies today is on shifting sand and accordingly to ask what a fair price is could become increasingly problematic. This question of price remains relevant for now but would become irrelevant if a currency's value quickly erodes. Then the only thing of relevance would be the price in a more stable currency or against real assets. You do not seem to be at all concerned about the likelihood of coming currency crises. Of course, if you think economic growth has resumed and everything has returned to normal, you have a point. In that case, pack away all those economic books, sell all your metal, stop frequenting fringe economic forums, put your feet up and rejoin the masses. Difficult to convince yourself happy days are here again isn't it.

Interesting comment. For me gold is just money [more strictly, a currency] and a means to buy property one day.... though at times I can wax poetical about it. I reckon investing, or trying to preserve your wealth, in this anarchic environment is akin to psychological warfare and moral rectitude does not come into it at all. In warfare you try to make use of any ground you can and utilize all the methods and alliances at your disposal. Don't get me wrong, I am not amoral, but do think a pragmatic and flexible approach as opposed to an orthodox one is of more use in the economic sphere.... or should I say when this sphere has broken down.

Makes you wonder why he even bothered to put the first chart together tracing nominal prices. The second chart shows how low the present price really is. Given both the low nominal price in present dollars and add to that a depreciated currency in the not too distant future it will not take much to see it at 1800. But at that stage I reckon we will be pricing it in something else... maybe Yuan.

Yes, keep us posted. I would be interested to hear the rationale for why you would need to own 30,000 ounces of silver in order to take possession of 1,000 ounces.

Why not have some cheap US dollars besides Euros. Given a good position in bullion already, you are waiting for a correction that may come. Have you considered that this correction may only come in the US dollar price? Bernanke the master manipulator may trigger a crash in the markets and another round of de-leveraging. Then again, all that may be required for this is political protest against further printing and for the fundamentals of the economy to play out. If we get deflation scare 2, most currencies are likely to weaken more than gold which may dip a little against the dollar [forced liquidation] but at the same time strengthen against other currencies as a currency. I have a similiar position though less cash and 50/50 silver. I will be looking to swap silver to gold at around ratio of 50.

And pog will go up unless it goes down.

If this happens, as I think it will, the US dollar price of gold is also likely to take a hit though will not be taken down nearly as much as other currencies. This is why it makes sense for someone to hold dry powder in US dollars if they are expecting future dollar strength which would most probably come with another round of deleveraging. I agree that those waiting in commodity currencies or the pound for a possible correction in gold could be waiting in vain as those currencies are likely to weaken more than gold.

I think it makes sense to be mostly in gold/silver while at the same time holding a decent reserve in US dollars as a hedge in case gold corrects. Buy with your reserve on the correction if/when it comes.

I noticed at another site some Aussies are waiting for gold to dip to near $1000 [now at 1200 odd]. I think this is unlikely. If gold dips it is likely to be on the back of forced liquidation in near everything. This would weaken all commodity currencies, and I would add "riskier" ones such as the pound. If the market carries on upwards over the summer, gold is likely to remain strong and track it as the only thing driving this trade is the potential [in the minds of investors] of future inflation. Also, QE has effectively put a floor of sorts under gold. Silver is a different kettle of fish. Would I be buying gold with pounds at these levels? Depends on how much of my liquid worth was in pounds. If most of it [and I was without a decent position in gold] I would buy with half of those pounds and then consider further buying on a possible dip. If I already had a good position in gold, I guess I could afford to be a fussier buyer.

Yeah, but for how long? For instance, I wouldn't want to be sitting on pounds waiting for lower gold prices.

If you want to keep funds in another currency long term Canadian dollars are good [being a kiwi, my plan is to eventually start buying the kiwi dollar but only when they are a lot cheaper]. For funds you plan to spend on gold or silver in the short term [when looking for a more favourable buying point] the US dollar is better. The US dollar should move in inverse to gold with the idea of buying weak dollars, and then in turn buy gold on weakness when dollars are strong. If you do not see the possibility of short term dollar strength/forced liquidation in the near future, it is best just to buy gold/silver outright with whatever currency. I also had CAD$ at goldmoney but as a commodity currency it was just tracking gold/silver so just bought silver with them. Worked out well because even though silver was more expensive in US dollars due to dollar weakness the CAD$ price was pretty much unmoved. I m still kind of averaging in now because at these levels gold/silver looks good to me. I reckon QE [psychology] has pretty much put a floor under gold prices for now. As for silver, well as we all know a little bit more speculative there, and as you say the G/S ratio looks a good way to play that. The wildcard for me is another round of deleveraging/forced liquidation so besides averaging in a little I want to keep some decent powder dry in the reserve currency. If G/S ratio goes to 50 odd I will swap silver for gold. I wouldn't wait for the ratio to fall too low. If we see deleveraging round 2, the ratio could easily go back to 80 or 90 which would obviously be a good time to swap back again. Wow! 63.3 now.

Say we get the ratio down to 50 odd on the risk/commodity trade. Makes a lot of sense to sell silver for gold around that level in case we get another period of deleveraging. .... then buy silver again when the ratio is 90. I am not buying into the story of 1:1 silver/gold..... not for now anyway.